General Motors calls on UK Govt to rescue it

General Motors, which employs 5,500 people around the UK, is in talks with the British government to secure cash to allow it to continue operating in what the car maker admits are "critical" conditions.

A report in The Telegraph says that the talks follow a decision by the US Congress to vote down a 14 billion dollar loan package to support the American automotive industry on Friday.

The future of British workers at GM plants in Luton and on Merseyside is unclear, as does that of up to a further 5,500 people employed by parts suppliers.

The Gordon Brown Government is likely to take a cautious approach to requests to bail out the UK car industry. It is thought more likely to consider offering bridging loans.

GM said it was "very disappointed" with the US loan package's failure, but continued to "look at options to restructure and stabilize the business in this exceptionally difficult economic period." It claimed to be operating "as usual".

The car maker, which owns brands including Vauxhall, Saab and Opel, said it was in talks with unions and European governments in countries where it has big operations to "provide liquidity for sustaining operations".

Underlining the urgency of the situation, GM said it would seek liquidity "while the US team pursues its options".

GM is also in talks with the German government, where it has Opel production facilities, in a bid to secure a credit guarantee.

The Swedish government yesterday announced a 28 billion Kronor support package to help the car industry. The plan offers credit guarantees, emergency loans and research funds to companies from Volvo to Saab.

Volvo is owned by Ford, which faces similar problems as does GM and Chrsyler.

According to The Telegraph, the Spanish region of Aragon, where GM has an Opel plant, has offered its own 200 million Euros credit guarantee.


Source; Agencies

Will the $15b-loan bail out help US auto industry?

Facing massive job losses, the White House and congressional Democrats are working to provide about $15 billion in loans to prevent Detroit’s weakened auto industry from collapsing. After yielding to President George W Bush on a key point, House Speaker Nancy Pelosi said the House would consider legislation next week to provide “short-term and limited assistance” to the US auto industry while it undergoes “major restructuring.”

“Congress will insist that any legislation include rigorous and ongoing oversight to guarantee that taxpayers are protected and that resources are directed to ensure the longterm viability and competitiveness” of the industry, Pelosi said in a statement. The Senate is also scheduled to be in session next week. The legislation, which was being crafted this weekend, would act as a lifeline to General Motors Corporation, Ford Motor Co. and Chrysler LLC while meeting demands from many skeptical lawmakers that Congress refrain from writing a blank check for the beleaguered industry. Officials in both parties said a key breakthrough on the long-stalled bailout came when Pelosi bowed to Bush’s demand that the aid come from a fund set aside for the production of environmentally friendlier cars. The California Democrat spoke to White House chief of staff Josh Bolten during the day to signal her change in position, they added.

Pelosi said the billions of dollars that had been set aside to modernize plants to develop the green cars would be repaid “within a matter of weeks.” Democrats said her hope was to include the funds in an economic recovery bill that lawmakers are expected to prepare for President-elect Barack Obama’s signature shortly after he takes office. Officials in both parties also said the legislation would include creation of a trustee or group of industry overseers to make sure the bailout funds were used by automakers for their intended purpose. The funds are designed to last until March, giving the incoming Obama administration and the new Congress time to consider the issue anew.

A Democratic aide said Pelosi was seeking a provision that would bar the automakers from using any of the funds to pursue a legal challenge to states seeking to implement tougher auto emission standards. The aide spoke on condition of anonymity because the legislation was not yet drafted.

Source: Agencies

General Motors will idle plants; Awaiting U.S. aid decision

General Motors Corp., under pressure after Congress delayed action on automaker aid, is idling four plants for an additional week, extending the shutdown of an engineering center and returning some corporate jets.

The closure of a truck factory in Oshawa, Ontario, is also being moved up by two months to May 14, Tony Sapienza, a spokesman for Detroit-based GM, said yesterday. The plants that will have the extra shutdown week in January are in Michigan, Ohio, Kansas and Missouri.

GM, which has said it may run short of operating cash by the end of this year, acted a day after Democratic leaders in Congress put off deciding on loans to automakers until next month. Congressional leaders want GM, Ford and Chrysler LLC to make a case for the help.

``At this point, GM is not thinking about 2015, they are thinking about 2009,'' said Mike Robinet, an analyst at CSM Worldwide Inc. in Northville, Michigan. ``Ninety percent of their decisions are focused on what they need do to bolster revenue and save cash.''

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